After a period marked by a succession of Chancellors and no official Budgets, normal service was resumed on 15 March with a ‘full’ Budget from Chancellor Jeremy Hunt. That said, it was not quite a return to the old-style tax-raising and tax-cutt ing Budgets seen during the Gordon Brown or George Osborne eras. This is partly because, as noted in our previous Bingo Connect commentary, Mr Hunt did much of his tax raising in November’s Autumn Statement. But this can also be att ributed to Government priorities, as this Budget focused on the spending initiatives required to ultimately deliver on Mr Hunt’s four Es: Enterprise, Employment, Education and Everywhere.
Good news for Bingo?
The Chancellor made no move to increase the Bingo taxes (Bingo Duty and Machine Games Duty). This seems to have been a conscious decision, rather than an oversight, as there was an increase in the taxation of casinos. This suggests that the relevant team in HM Treasury made an assessment of the gambling industry, but declined to raise additional revenue from Bingo. In less welcome news for business generally, there were no new measures to help companies with additional fuel costs.
Importantly, though, the Chancellor’s tax raising zeal did not extend to a direct raid on the Bingo industry. The headline rates of Bingo Duty and Machine Games Duty were not increased. While that might be cold comfort, given the increased taxes that operators and customers will face over the coming years, it is a promising sign that even a cash-strapped Chancellor like Jeremy Hunt did not have Bingo on his hit-list.
A few significant tax measures
This Budget’s headline-grabbing measure was the introduction of a full expensing regime in corporation tax for the next three years. This allows companies to write off the full cost of investments in qualifying new plant and machinery in the year of investment. As the Chancellor stressed in his speech, this places the UK in a unique position among the “major European countries”, with the hope that additional foreign direct investment will be drawn to the UK.
However, it is worth noting that the £1m Annual Investment Allowance will already deliver the same incentive for most companies.
Other measures that attracted attention included the abolition of the lifetime allowance on private pensions and the increase to the annual allowance from £40,000 to £60,000. In theory, this should remove the incentive for senior surgeons, and others, to retire early when faced by the on-set of high tax rates. Incidentally, the removal of the lifetime allowance has also changed the nature of the ‘25% lumpsum’ which is no longer a straight 25% but capped at its current value of £268,275, being 25% of the now-removed lifetime allowance limit.
Several big spending measures
The centre-piece of this Budget was a series of spending measures designed to restore growth to the UK economy. The Chancellor positioned these under his “Four Es” vision for economic growth:
- Employment – the key challenge being to get the economically inactive back into the labour market.
- Education – with a focus on childcare costs as a way of getting women back into paid work.
- Enterprise – which is to be promoted through investment incentives.
- Everywhere – a way of looking at “levelling up”, where the leading measures included the creation of new enterprise and innovation zones across the country, while smaller measures addressed issues such as potholes.
The efficacy or otherwise of these measures and incentives will become clear in the coming months and years. More direct and immediate help, though, came from the Chancellor’s refusal to impose an increase on fuel duty.
What can we expect for the future?
This was very much a transitional Budget. First of all, it marked the completion of the stabilisation exercise which Jeremy Hunt launched in November, looking to settle the market volatility that followed his predecessor’s ‘mini Budget’. Second, it sets the scene for the coming year, when thoughts will turn to an upcoming General Election which needs to be called by late January 2025.
We might expect a period of relative tax-policy calm between now and the General Election. However, that calm is likely to be disturbed by the arrival of the Gambling White Paper.
Chris Sanger is Tax Policy Leader at EY and Steven Effingham Tax Policy Director at EY. The EY tax policy network has advisers in more than 85 countries and advises clients on how to effect policy change directly and through strategically engaging policy makers. www.ey.com